Schaeuble Says Euro Area Is Preparing for a Possible Brexit

  • Officials fear other EU nations could follow U.K. out of EU
  • Intervention comes as ‘Remain’ campaign targets Boris Johnson

The Financial Implications of a Brexit

German Finance Minister Wolfgang Schaeuble said officials in the euro area are preparing for the possibility of Britain voting to leave the European Union.

Brexit Watch: The pound, the polls, and the probability of Brexit, all in one place

As polls suggest the outcome of the June 23 referendum is too close to call, plans for a post-Brexit Europe include the possibility of other countries following Britain out of the 28-nation bloc if Prime Minister David Cameron loses his campaign to stay, Der Spiegel cited the minister on Friday as saying in an interview.

Planning is being carried out “for all possible scenarios in order to contain the dangers,” Schaeuble told the magazine. “How would, for example, the Netherlands respond, which is traditionally very strongly associated with Britain?”

Separately, it emerged that the European Central Bank is ready to offer euro liquidity via its existing swap agreements if the U.K. votes to quit the EU.

“Life won’t change much after the referendum -- these agreements and contracts will still be in force,” Governing Council member Ilmars Rimsevics, who heads Latvia’s central bank, told reporters in Riga on Friday. “If they’ll be needed and there is some sort of shock, then of course these lines will work.”

‘Desperate State’

Schaeuble, who has appeared alongside Chancellor of the Exchequer George Osborne to make the case against Brexit, said if the U.K. leaves it would not be able to enjoy the benefits of the single market without adhering to its rules. Britain would “have to follow the rules of a club which it just left,” he said. Brexit would surely hurt the U.K. economy, while Europe will work without the U.K. “if necessary,” he added.

His comments drew an angry response from the official Brexit campaign, which said the euro region had more to lose if Britain left the single market.

“The euro-zone economies are dependent on trade with the U.K.,” Vote Leave Chief Executive Matthew Elliott said in a statement. “We are the fifth-largest economy in the world, while many of them are in a desperate state due to the failing single currency. There is no question about it, Britain will still have access to the single market. It would be perverse of the euro zone to try to create artificial barriers -- and would do far more damage to them than to anyone else.”

No. 10

Schaeuble’s remarks were published the morning after former London Mayor Boris Johnson, a leading Brexit advocate, came under concerted attack from fellow Tory Amber Rudd in a televised debate on the referendum.

“You need to look at the numbers,” Rudd said in response to a question about immigration during the two-hour ITV debate in London. “Although I fear the only number that Boris is interested in is the one that says No. 10,” she said, a reference to the prime minister’s official residence at 10 Downing Street.

It was the latest in a series of personal attacks, underscoring just how alarmed the prime minister’s team are by the “Leave” campaign’s continued support in public opinion polls.

Boris Masks

Activists from the opposition Labour Party, which is also campaigning to stay in the EU, wore Boris Johnson masks as the party outlined the dangers of a government led by him after a Brexit vote. Cuts would be made to public services and support for the vulnerable if Britain votes to leave the bloc and workers’ rights stripped away, the party said.

QuickTake What if the U.K. Leaves the E.U.?

“Boris Johnson is a message carrier for the ‘Leave’ campaign and its him, Michael Gove, Priti Patel, people on the hard right of the Conservative Party, who will be in power if we vote for Brexit,” Labour deputy leader Tom Watson said when asked to explain the focus on Johnson. “We know their record on austerity and its working people who will pay the price.”

Budgets of government departments may decline by 2.8 percent on top of already planned reductions, while social-security cuts and tax increases totaling more than 18 billion pounds ($26 billion) will be needed to balance the books, according to an analysis published by Labour.

The party, which has teams leafleting and knocking on doors across the country, has struggled to make its views heard in national media during the campaign as it has been drowned out by the Tory discord.

‘Blue-on-Blue’

“The sexy part of this campaign has been the blue-on-blue action,” former Labour leader Ed Miliband told BBC Radio in a reference to the Tory party’s internal struggles. “Not enough of our voters have heard that we are for in, for ‘Remain.’ We’re for it because economically we’re stronger, for workers’ rights we’re stronger.”

The government was forced to extend the deadline to register for the referendum by 48 hours after the website crashed on the evening of June 7, hours before the initial cut-off point. During that time, there were 433,695 applications, bringing the total in the seven days through June 9 to more than 1.5 million, Cameron’s spokeswoman, Helen Bower, told reporters.

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